ECB, Commission give lukewarm welcome to Germany's deposit insurance idea

FRANKFURT (Reuters) - A German proposal for a bank-deposit protection scheme covering the entire euro zone got a lukewarm reception on Wednesday from officials of the European Commission and the European Central Bank.

The proposal by German finance minister Olaf Scholz, published earlier on Wednesday, signaled Germany may be willing to drop its long-standing opposition to such a scheme.

"It's a very good starting basis," Olivier Guersant, the director general of the European Commission's financial stability department, said at an ECB conference. "It's of course under-ambitious vis-à-vis what the Commission thinks is necessary."

Yves Mersch, the deputy chair of the European Central Bank's banking supervision arm, said he was grateful for Scholz's proposal but he cautioned the euro zone's banking regulators had their own preferences on the matter.

"For every stone that is brought to finishing ... an unfinished house of banking union I say thank you," Mersch said. "Of course we would have our preferences ... as supervisors."

(Reporting By Francesco Canepa, editing by Larry King)

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